Dave:
Hey, everyone. Welcome to On The Market. I am joined today to talk about 3D printed houses, a topic I have been long wanting to get into with my friend, James Dainard. James, what’s going on, man?

James:
Oh, just living the tough life. We’re out in Catalina Island right now.

Dave:
I know. I’m getting seasick a little bit watching you on the camera because you’re just bouncing around on your boat right now.

James:
This is just heaven on earth. I like the rocking. It’s the most calming place I can be.

Dave:
So you’re just working full-time regular job, doing everything you do just from a boat?

James:
Right now, today, I get to. So that’s the benefit. I flew back from Seattle late last night and got on. I literally landed, packed up my stuff, got on the boat, and mashed out. Just always on either plane or boat, I guess now.

Dave:
Man, anyone listening to this who is aspiring for financial freedom, James is giving you a masterclass on where you could get to through the power of real estate. It’s pretty awesome.

James:
This is all paid for by my interest in investments, by the way. Everything is paid for.

Dave:
That’s incredible. Well, James, we have an awesome interview that we just wrapped up with the CEO of one of the biggest and most successful 3D printed housing companies in the entire US. There’s so much in there. Honestly, this is one of the most exciting, inspiring interviews we’ve had on this show. What did you learn from it, and what do you think our listeners as we’re listening to this interview with Zachary should pay special attention to?

James:
Well, I learned that this is no longer just this random idea that you hear about. I mean, I’ve heard about 3D printing and all and I’m like, “That doesn’t even make sense. A printer’s going to build a house? That does not make sense,” but I guess it does make sense, and not only does it make sense, that it’s going to be at our doorstep a lot faster than I was anticipating. There’s a ton of benefit. I mean, the benefits that he goes over about building cost efficiencies, the fact that they can just create their own tools or products that they need right there on site. I mean, those are huge efficiency factors that he goes through that are the most important part of when you’re doing value add construction.

Dave:
Yeah. It’s unbelievable what we learned and I, like you, felt like this is something maybe one day like, “Oh, that would be cool,” like the idea of a flying car, but this is not actually The Jetsons or something in the future. It’s actually happening right now. They’re building these houses. They have two people who are actually living in houses they already 3D printed. So this is real and it’s probably only going to get bigger. So I love this interview. Super, super interesting, a really new, interesting topic to learn about. So with that, we are going to take a quick break and then get into our interview with Zachary, the CEO of Alquist 3D.
Zachary Mannheimer, CEO of Alquist 3D, welcome to On The Market.

Zachary:
Thank you so much. It’s great to be here.

Dave:
We’re really excited to have you here. Kalin and I, when we first started On The Market, one of our top things that we wanted to talk about was 3D printed homes, have been really fascinated with this whole industry. So super excited to have you here. For everyone listening, just so you know, we’re going to have Zachary here talking about some of his company’s current projects and works, and if you want to learn more about the 3D printing industry in general or Zach’s story, tune into BiggerNews on the BiggerPockets Real Estate feed tomorrow, where Zachary is going to be a guest there as well, but for today, Zachary, I would love to just hear a little bit about Alquist’s mission and what you all are up to right now.

Zachary:
Our goal is to solve the housing crisis. That’s why we started the whole company. For 10 years, we’ve been doing economic and development and creative placemaking in mostly in rural communities around the country, but the number one need, no matter where you are, is housing. That’s really the common denominator that can, I feel, bring a lot of people together is that it doesn’t matter if you’re in rural New Hampshire or rural Mississippi or rural Arizona. They all have the same problem. Housing’s the number one issue. So we created this company to address that need. That is the mission of the organization and we’re well on our way.

Dave:
I love how simply you say that your mission is to solve such an enormous problem. That’s incredibly ambitious.

Zachary:
Oh, it takes us a couple weeks. No problem.

Dave:
Yeah, if the printers are that fast, I guess.

Zachary:
That’s right.

Dave:
So it’s interesting you said that. I do want to get into that, to what you just said, but you mentioned that it’s mostly a problem in rural communities because I’ve always seen the stat that the US is somewhere between five or seven million houses short in the US. Is that correct that it’s not evenly distributed through different communities, different locations? Is it worse in rural communities than it is in urban or suburban areas?

Zachary:
I would say it’s worse per capita in rural locations. There’s certainly a larger shortage in urban areas. No, there’s no doubt. There’s larger demand. I don’t want to make the impression that 3D housing is only for rural. It can be done anywhere, but our mission is not just rural, by the way. Rural is one of the areas that we focus on, but it’s also underserved communities. Really, the areas that we’re not completely focused on, the areas where affordability is an issue but it’s subjective. It’s that there’s tons of builders there and developers there. We’re looking at the areas where developers don’t want to go to.

Dave:
They don’t want to go there because it’s not profitable?

Zachary:
No, it’s less profitable than it is in some of these other places. That’s part of the reason. Another reason that you guys were talking about earlier is the issue of finding labor and making sure you have enough talent there. On and on, there’s concerns, but that’s why it’s a golden opportunity right now for smaller communities and underserved communities for the biggest reason that for the first time in human history, you can live anywhere and work anywhere, but that means you have to have a good broadband signal and you have to have an appropriate home.
So my prediction and our company’s prediction are that some of these overlooked areas are going to and already are becoming really popular and exciting places for people to want to live, but these were overlooked for decades, and they’re exotic. What happens in some of these areas compared to urban areas? Nobody knows that are in urban areas. I grew up in urban areas. That was my life for a very long time. I was originally from rural, but I grew up in the Philadelphia Metro, and I was in New York City, and London, and big, big cities for most of my life until I moved to where I live now and the work that I do now in Iowa and beyond.
I had no knowledge of these places. I didn’t even know how to pronounce a place like Des Moines. I never heard of it. It didn’t even cross my mind, and that was part of the problem. That’s the larger political problem that we see right now, but from a housing perspective, we think we can solve a lot of problems nationally beyond housing if you’re able to live in some of these smaller locations that have been overlooked.

Dave:
Is that the idea behind Project Virginia, which sounds like is one of the most, probably the most ambitious 3D printed housing project to date? Is that right?

Zachary:
It is. We are a very ambitious group. So Project Virginia is the largest 3D printed project planned on the residential side in the world. The plan is to print 203 printed homes throughout the Commonwealth of Virginia over the next four to five years. We’re starting in on that work right now. It’s super exciting, super ambitious. We still got a lot to learn, but we’re well on our way.

Dave:
That’s awesome. Can you just tell us a little bit about the project and how it came about?

Zachary:
So we started our work in Virginia because we started a collaboration with Virginia Tech University and got a grant from Virginia Housing to print the first home in Richmond, which we did last year, and that gave birth to the work that we’re doing now. Since our first home to be completed was the Habitat for Humanity Home in Williamsburg, when that came online in the end of last year, things went crazy. Today, we’re averaging anywhere from 20 to 30 requests for 3D homes every hour. It’s been that way since Christmas and shows no signs of stopping. It really illustrates how bad the problem is.
Now, what’s interesting about that amount of interest coming in is roughly 70% to 80% of it are individuals all over the world that are saying, “Hey, I’ve got land. Can you come 3D print me a house?” There’s 20% of those folks are municipalities, state governments, federal governments that are reaching out to us and saying, “We have a severe need in our neck of the woods and can you come and help us?” So we are doing that. The economic model surrounding that is by us offering licenses, which we can get into, but for Virginia, that’s been where we’ve been working for the past two years.
We’ve got amazing relationships throughout the Commonwealth there on the academic level. At the state level, we were really pleased that Governor Youngkin came out to our job site in Pulaski when we announced Project Virginia, and he’s a big believer in this technology. So we’ve got a great support system there, but there are three strategic states that we’re going to be printing in the next 12 months, and that’s Virginia, Florida, and Iowa. We really wanted to pick three states that were right next to each other.
So we got interest from all over the place, but there’s no possible way that we can cover the amount of interest that’s coming into us. So we’ve created a licensee program and we’re going to be doing four of those this year, where we work with construction companies or otherwise that want to get into this because when you look at what Alquist has done, it’s taken us six years and $2.5 million to get to where we are today, but it doesn’t need to take that much time or money for another group to get there. They can work directly with us. We can train them, give them our designs, our performance, our knowledge, our brand, and be their tech support throughout the life of the contract. We’ve got tons of interest from all over the world. We’re going to do one international, and we’d love to be coming to a place near you.

James:
So Zach, when you guys are planning out, why did you pick those three states because, obviously, they’re a little bit geographical, different locations? As you guys are looking at expanding this product, part of building, I know when we build, anytime we build in a new area, it’s a new learning curve, and typically, we’re off on our metrics by a good 10%, 20% because it’s a new thing, new city, different types of costs. So why did you pick those three different types of states? Is it specific states that are more open to it right now or is it more just because that’s where you want to go?

Zachary:
A bit of both, but you’re right, and that’s why we’re not necessarily mobilizing in other states just yet even though there’s demand for it is that it’s expensive to show up and you’re right that the metrics are going to be off and it’s a learning curve and that time is money. So we’re heavily looking at that.
Virginia, obviously, that’s where we have been and historically where we are going to be or where we’ve been and the work that we’re going to do. Florida is the hottest market in America, in our opinion, and concrete is very well-accepted down there and the need is huge, and there’s some really interesting projects that we’re going to be announcing soon for what we’re doing. So it was a no brainer for us to be going there, and we were getting support to help get set up. Iowa is mostly selfish. It’s where I live. I live in Iowa City. I want my kids to see the printer, and I want to be able to go to work without getting on an airplane. So that’s why Iowa.

James:
So is it more based on material selection then for areas that are … For example, Arizona has a lot of concrete houses, a lot of stucco, same with Vegas. Are those the markets you’re going to target more just because it’s more acceptable for what they’re used to seeing?

Zachary:
Well, it would be easier there, for sure, but frankly, I mean, the need is so great everywhere. It doesn’t matter whether they’re accepting of it or not. They know that they need housing. Now, you’re right that there are areas of the country that are more accepting to this style, but we’ve actually come up with some pretty interesting and innovative ways to do different designs with the concrete. We can smooth the concrete as we’re printing. It gives it a stucco-like look. We can imprint upon the concrete. There’s a lot of different levels that we can play with.
We actually figured out how to do this by accident. Our first print site in Richmond, overnight, unfortunately, somebody broke into the job site and they stole the print nozzle, which is ridiculous because there’s nothing you can do with that unless you had a half million dollar printer, but it got done, but we didn’t let it stop us. Our young printer operator, Aiman, he’s a crazy person that always travels with his own personal 3D printer strapped to the passenger seat of his car. So he went out, got his 3D printer, set it up, and printed a new brand new nozzle out of polymers and we were back going an hour later, and he improved the nozzle. He added us a feature on the side that was able to smooth the concrete. We all stood back and went, “Oh, this is, yeah, this is what we want to do.” So now, we’ve been working on several different designs. So it was a happy accident.

James:
That’s amazing because we have theft problems up in Seattle. If I could just print my materials that next day, that would be-

Zachary:
I can’t tell you how many times our pump system has broken down and we just print a new part.

Dave:
That’s unbelievable.

Zachary:
I mean, this is the future. It’s not just about construction. 3D is about 3D printed houses and that’s the sexy, cool thing that everybody’s doing that they want to know about, which is great, but you can print anything, and that’s our goal. This is the change that’s taking place not just in the home building world, but the home renovation world, and you go around as if you’re obsessed like I am and you drive around and just take pictures of things that are made out of concrete, and I send it to my construction manager and say, “Let’s print this. Let’s try that. Let’s do that,” to the point where he’s turned off, I think, any notification from me, but this is the wave of the future that’s really going to take place. It’s not immediate. It’s going to be over the next couple of years, but getting in on this now is very exciting and there’s really no limit to it.

Dave:
It is amazing. It does just sound like so futuristic. It’s remarkable. I’d love to jump into the logistics and economics. So what is often so touted as one of the most exciting parts of 3D printing is the potential cost savings. Can you tell us a little bit about that?

Zachary:
So there’s a lot of misinformation out there in this world. From our experience, what we would say is the cost savings are there, but they’re very, very slight today, 5% to 10% at most, and that’s apples to apples versus stick boat. Now, when you’re scaling it at volume, when you get above 20, 30 homes at a time, that’s when the cost savings really show up in other ways that when we can do multifamily and go vertical. Now, nobody’s ever printed above one story in America. It’s only been done twice in the world, once in Dubai and once in Germany. That’s a whole new world of 3D that’s going to be taken shape in the next couple of years. We’re looking forward to that. We’re experimenting with that, but we’re still a little bit of ways from doing that.
There’s a couple things that have to happen to really show the cost savings, which will be there. We’re convinced of that. The first thing is the printers themselves. They have to get lighter and more nimble and easier to transport, set up, breakdown. That’s the first piece. So there’ll be new printers coming online in the next couple of years.
The second thing is the material cost. It is less than lumber, but not far less. So we need to be able to source material locally, and that’s a goal of ours anyway. So that’s how we can make our material greener by using recycled materials, by using plant-based material like hemp and otherwise. We’re experimenting with all of that right now, and we’re hoping that next year that’s going to be ready to go.
The third thing is just experience. There’s less than 10 homes in America that have been printed. Two of them are ours. We’ve got the only two homes in the world that actually have people living in them. This is a very infant moment for this industry. I think I overheard earlier when we were talking before about the electric car industry and how when that first started it needed tons of subsidies. Same with coal energy, same with solar power, same with any major industry, you have to incentivize it, it’s dirty, it’s inefficient, it doesn’t look great, it’s expensive, but it works.
This industry is just like that, no different, and it’s going to keep getting better as we go. So our prediction is by 2024-2025, you’re going to see significant cost savings, but we also think that’s going to happen when the worlds of 3D printed technology and panelization and pre-fabrication, when those two worlds get married, that’s the goal and that’s what we’re working towards.

James:
What does it typically cost per square foot to build one of these houses because at the end of the day, that’s really what builders are looking at? I know for us in our local Seattle market, for us to build a nice home, not too spec, but I would say in the upper spec level, it costs us, we’re at 275 to 290 a foot foundations, plans to delivery. For us as a builder, we’re tracking those costs rapidly. Obviously, with the supply chain issues and inflation, it’s made it substantially more difficult or slower because we have to time. The biggest thing is we have to time when we’re locking in lumber, how do we secure it at the right time.
So we’ve been able to control our build costs a lot better than our remodel costs, but the timing’s been killing us because of the delays. What does it typically cost to build per square foot for an entry level, I mean, 1500 square foot house?

Zachary:
So think of it this way that the 3D part of the home building process at the moment takes up about 20% of your overall project. So right now, we think that it’s at a conservative level, 5% to 10% less than the numbers you’re getting right now, but it swings wildly. We’ve seen it go as low as 180. We’ve seen it go as high as 300 and everything in between. So it really depends on where we are. It depends on what kind of home you’re building. It depends on the labor that’s available. It depends on the supply chain, just like a home builder like you or anybody else, but do know there is a cost savings, especially when you’re doing in scale and it’s only going to improve.

James:
Well, and the timing too because a lot of us for builders, the debt cost or the soft costs are a huge expense in our performance. A lot of times our soft costs are taking up 20% of the whole margin and that’s because it takes us nine to 12 months to build a house.

Zachary:
Yeah, we can do that much faster.

James:
Yeah, and that alone will shred the cost down.

Zachary:
That’s the big place you’re seeing the savings today. Yes.

James:
How long does it take from grading to completion typically to get that structure complete and finaled off?

Zachary:
We got our Habitat Home done in 180 days, and that was a 1300 square foot home, three bed, two bath home. Now, we had a lot of people helping. There was some volunteer labor, of course, because it was Habitat, but mostly, it was a local crew that was doing it. So we believe that we can get these homes done in six to eight months easily. The goal would be to get under six months eventually is where we want to get to, but the printing process, if we have good weather, you can print the entire exterior walls of the home in about 20 hours. So that’s really where you’re seeing your cost savings, and if you’re doing a large project and you set up our Black Buffalo printer, which is on a track system and we can go straight down and print, print, print, print, print without breaking it down, that’s when you get major savings because we can save significant time.

Dave:
What about some of the other costs and time consuming parts? We’ve been hearing a lot about how long it takes to get permits, for example, to build new construction in the US, and I know this varies dramatically based on municipality, but do you see any obstacles to 3D printing based on permitting or do you think that certain municipalities might be opposed to this technology?

Zachary:
You know, we thought this was going to be a major pinch point for us, and we were fully prepared to wait weeks or months to actually get approved, and that was not the case. There’s an education gap, 100%. I would describe every code official that we’ve talked to as optimistically skeptical for what they want to do.
At the end of the day, what’s wonderful about this is that it’s concrete. It doesn’t have to be a special concrete. In many cases, it is, and that just means it’s more reinforced and stronger, but it’s concrete. We’ve been building concrete structures around the world for hundreds of years. It’s nothing new. We don’t pour it in a form, of course. We extrude it with a giant robot, which is weird, but other than that, it’s done basically the same process as you would if you were pouring a form.
So when the code officials come out and see it and we want to be prototyping wherever we are so they can actually come see it, so there is a little bit of more cost on that end until we prove the model, but that’s our job. The code officials are onboard. Nobody’s standing in the way of it. Sometimes we hear, “Oh, it’s going to be ugly,” or “What’s going to be like to live in it?” or whatever, and we show them the images of the homes we’ve already done, and it removes any skepticism right away and folks get onboard. So I don’t believe that’s going to be the problem.

Dave:
That’s great news. I mean, I wonder what you think how they would handle that in Seattle, James. Isn’t it months right now to get a permit?

James:
Oh, my God. On our single family in Seattle, it takes us nine months to get a permit, six to nine months, and for town homes, it’s 12 to 18 months. So what’s happened is, and there’s so many things that come out of efficiently building because part of the thing is sellers have to take less from us because we have to wait that time period or they got to wait a long time. So if you can eliminate the cost of the time, you can actually sell properties cheaper to the next consumer. You can pay the seller more, and there’s so many good things that will help the economy in a healthy way. My biggest concern was just the good weather in Seattle. We get 10 months of rain a year. So it’s like, “How do we pour anything?”

Zachary:
3D printing is a challenge there, yes, but at a place like that, that’s where you’re looking at prefab. You can print the whole thing in a facility, in a controlled environment, bring it out. It’s much easier to do it that way when you’re not fighting the weather. The question is, “Does that increase in cost because of transportation and set up and breakdown, et cetera? So that’s a math equation and we believe by 2025 it’s going to be a no brainer.

James:
I remember in 2017, when green building hit this peak, like in Seattle, green building was a huge thing. They were doing net zero houses, five star, and since then, it’s peeled back a little bit because the new building codes are so good anyways now. You’re basically four star with any kind of regular build, but at the same time, there was all those manufactured homes coming in, the modular modern homes, but the biggest problem because we looked into trying to implement that plan because we were like, “Oh, this is great. We get to build it off site. We get it dropped in. We can construct it in a very short amount of time once it’s done,” but the cost was three times more than what you’re quoting. It was going to be $600 to $700 a square foot, and we could not make anything pencil.
I was actually anticipating you saying that it was going to be more $400 or $500 a square foot. So the fact that it’s so close, I mean, you guys are really on the verge of the edge of just going over because costs have always been the biggest deal for those deals because at $500 a foot, you just can’t make anything pencil.

Zachary:
No, and that’s part of the problem with the industry in general, and then there’s other benefits to this and costs are going to come down, which is great, but the other two big benefits here is that thanks to a study Virginia Tech did, we know that a 3D concrete home uses 50% less energy than a stick-built home. So right off the bat, you’re cutting your energy bill in half without even doing any solar or anything else to make you net zero, which we do, by the way. We work with a group called Mavericks Microgrids out of California. They’re going to put solar panels, microgrids, batteries, and EV chargers on all our homes, which is great, but even without that, you’re at 50% less for energy.
The other thing to consider is that our homes structurally are much more efficient and can withstand major storms, and this is something we need to do more study on this and there’s going to be academic papers on each of these coming out next year on looking at seismic concerns, looking at flooding, fire, tornado and hurricane, and ballistics and how does the house perform. So that’s all going to be coming out in the next year or two, and you’re going to begin seeing that.
So there’s going to be other added benefits to this outside of just the cost savings, and then you add in the customization and the design, you can really make an interesting, crazy, we have these amazing designs, so totally crazy Jetsons futuristic stuff that we’re not doing right now because people would look at it and think it’s ugly. So we were very specific that the first homes we were doing, they got to look like homes. They got to fit the neighborhood that we’re going to go into, and that’s why we did a very traditional design and they look great.

Dave:
That’s very wise.

James:
Yeah. A whole new architecture class is going to get built. Craftsman, modern, colonial, those are all going out the door.

Zachary:
They might, they might over time.

James:
It’s going to Jetsons.

Dave:
So this is so fascinating. I love learning about this. If people want to get into this, how hard is it? It’s such a nation industry. Is it possible for regular investors, regular homeowners to build or print a 3D home right now?

Zachary:
It is challenging. So first of all, from an investment standpoint, we are in a funding round now. So hi, give us a call. So we’re actively doing that, which is great, but just for the homeowner who wants to get into it, it is a challenge. We are not taking orders to go do one single home at the moment. It doesn’t make sense financially. That will change by 2024 is when we will start doing that.
For the most part, partnering is a great way to go, but it’s also the license agreement. For people that really want to get into this, they don’t need to spend the years of time that we’ve put in and the money that we’ve put in. We want to be the consumer reports of this world. We want to be offering all the ideas that we … We’re the only company in the world that’s printed with two different printers. There’s more out there that we want to be testing. There’s different materials that we want to be testing.
We want to be working in general to get the common knowledge out there. The only way this is successful for Alquist and in general for the greater population, which is what we want, is commercialization. So we need there to be 50 more companies like ours. We’re the only major 3D company out there that we’re not manufacturers. We don’t make the machine. We don’t make the material. We’re a construction company.
So we are constantly looking to improve upon our situation and looking at the market and seeing what’s out there, and we’ve got great partners. Black Buffalo 3D is our manufacturer of choice. They make the best printer we think on the market right now. Their material’s great. They’re great to work with, but there’s constant improvements all the time.

Dave:
You mentioned earlier about licensing. Can you tell us more about that?

Zachary:
Yeah. This is a great way to really get into this world. Like I was saying before, you don’t need to spend the six years and two and $2.5 million that we’ve done to get to this point. So if a group wants to get into this, we look at strategic locations where we’re going to be offering this and we’ve got four that are running right now. There’s about 16 or so different groups that we’re talking to all over the world. Many of them are here in the states. There’s a couple international.
So they would work where they partner with us. We give them our knowledge, our brand, our designs, our proformas, our curriculum so that this can be taught where they are, and then they get access to all of our ongoing R&D. We’ve formed a community amongst all of these groups and we talk every two to three weeks. We share more stories and, inevitably, one group over here says, “We had a problem with this and this group over here says, ‘Oh, yeah, we had the same problem. We fixed it like this,’” which is tremendous, and that’s just going to continue.
So the relationship lasts for a couple of years and then that group goes and becomes their own entity or they continue to partner with us, but we want to stand up the industry. One, we have to solve the housing issue and we need more people actively working on it like we are to help fix that problem. Secondly, we need more workforce development. We have to get young people back into the trades. We think that 3D printing is that gateway drug, if you will, of getting young people to want to be attracted to going into construction. They can play with the machine. They can do this with a screen, and we’re already seeing this in Virginia as we spread the word.
So we’re going to have a curriculum that’ll be ready next year that we’re going to offer to community colleges and high schools, and we know that there’s hundreds, if not thousands of people eventually that’ll go directly into the job market and can get a high paying job in additive manufacturing working not just with our company, but with the companies that are going to be widespread all over the place.
That world is going to marry with traditional construction, and it’s going to marry with panelization and pre-fabrication modular manufacture construction. Those worlds are going to get married and we’re going to create lots more jobs, but we have to have a strategic approach. Groups have to take the initiative and get it moving. It is challenging, but we’re proving as well as our colleagues that it’s not only possible, but it’s going to be thriving soon.

Dave:
James and I are both frozen. You froze our brains.

James:
Yeah. Well, literally, what just popped into my brain was because he’s talking about how efficient this is going to be and it doesn’t work in wet weathers or different coastlines, I’m like, “The path of migration for affordability could be rapidly changed right now.” I’m like, “Do you just go out and start buying really cheap large plots of land in dry areas that could be developed because you can pick it up so cheap right now if that’s where the migration’s going for affordability?” Now as you’re talking I was like, “What should I go buy right now? What should I go buy?”

Zachary:
Well, let’s do it together. I mean, this is where we see this happening. We had the same idea. We are doing that. There’s this three-headed monster of migration happening right now, and this is unprecedented. What we have to remember for the first time in human history right now, you can literally live and work from anywhere and you don’t have to be attracted to a city to get the best arts and culture, the best business and education opportunities, but you have to have strong broadband and you got to have a house. So that’s what we’re trying to fix.
Now, on the other side of that, you’ve got economic migration. That’s been happening forever that, but normally, it would happen where you’d go in a first city like a New York or San Francisco, you’d move on to a second city like a Minneapolis, a Nashville, an Austin, a Denver, and then maybe you’d move to a third city, which is we are in the rise of the third city right now. Those second cities I mentioned, they’re already oversaturated. The third cities, Des Moines, Iowa, Boise, Idaho, Albuquerque, New Mexico, Madison, Wisconsin, Raleigh, North Carolina, Little Rock, Arkansas, Birmingham, Alabama, these are the cities that are gaining population today at almost the same identical rates per capita that San Francisco saw 100 years ago. It’s the same thing that’s happening.
Our prediction before COVID was that those third cities were going to get hit saturation levels sometime between 2030 and 2035, but everything’s changed now because of COVID. People are going from first cities to six cities and everything in between. So you’ve got economic migration, you’ve got pandemic-based migration, and then I think the biggest driver is climate migration, to your point, where we see people not wanting to live where there’s natural disasters all the time, and they want to go to a drier area, a safer area, a place like Iowa that has an abundance of space. Welcome.
This is what’s happening around the country right now. So we are targeting, we have a very close eye on where we think those markets are. We are acquiring land in those areas, and exactly to your point, we intend to build specifically there as we see these growing patterns continue.

James:
Do you think at some point you guys are going to come in and plan a whole city with 3D print like, “Hey, we’re going to do our shopping center, our malls, our housing,” like you’re just going to construct cities at a time?

Zachary:
Absolutely. I mean, this is already happening in Southeast Asia, not 3D printing. That’s part of it there, but they’re building entirely cities that float. I mean, that’s way beyond anything that we’re talking about, but yes, we will be doing all of that, and it’s not just going to be out of concrete. It’s going to be out of multiple materials that you can do these areas in. I hate planned communities. I think they are vanilla and boring, and it’s a big problem with our country, and our people are choosing to live in areas that are just blah, but that’s completely changing.
There’s planned communities that I’ve been to. There’s a great one in Florida called Babcock Ranch, which is just they planned it correctly. It has exactly what you want to have there. So we know how to do this properly. The future of shopping and retail has changed.
So when you talk about a planned community, you’re going to build Zoom communities. When we design these homes now, they have to be designed with an area for people to be able to work from home, have to be designed with an area for where their kids are going to be if they have childcare, designed for an area for a business if they want to have that in their home as well. That’s the future. That’s where we’re heading.
So when you think about that in retail, if you’re not walking down the street to go to a store anymore, what does the future community look like? We have active discussions about this all the time. That’s the work that my other group Atlas does, where we design these areas or, in many cases, redesign rural communities to meet the future that can overtake the areas in urban right away.

Dave:
How far off do you think that is, Zachary, to the point where you reach scale? First, I guess two questions. One is at what point do you think you’ll reach cost efficiency because I know part of your mission is to provide sustainable and affordable houses, and it sounds like right now not at the point where the cost savings is very considerable. What point do you think we’d get there, and then at what point do you think we’ll be reaching what James just asked about where it’s more than individual homes, but we’re seeing large scale developments with 3D printed technology?

Zachary:
I think the cost, the major cost change is going to happen in the next two to three years. You’re going to see that shift. I think at the same time is when you’re going to see what James is talking about. You don’t just have to print houses, you can print virtually anything, and that’s the world that we’re going down as well. So I think this is going to happen faster than people think. I think that people are not necessarily ready for it just yet and it’s going to have come upon them before they know it, but with the research that we do every day and the groups that we’re talking to, it’s going to be a widespread market pretty quickly. I would say 2025, 2026 at the latest when you see this really take root.

James:
My goal in life was to always build a skyscraper and put my name on the top of it. So now, I have a new, I can build a whole city. This is even better.

Zachary:
There you go. That’s a lot easier.

James:
Does that mean whoever builds it, do they get to be the mayor too?

Zachary:
Why not?

Dave:
You can make your own rules.

Zachary:
Yeah. I’m reading a book right now called, I think it’s called The Atlas of Failed Countries or something like that, but it’s all about people that started countries that lasted for a year or two and they were definitely the governor or the president or the mayor at the time, and it didn’t go very well for them.

James:
They short lived development.

Zachary:
Short lived, short lived. Yes.

Dave:
Zachary, this has been a really insightful conversation. What else do you think our audience should know about the 3D printed industry?

Zachary:
I think they should know that it’s rapidly approaching and becoming commercial in the next couple of years. I think there’s still a lot of experimentation to do. There’s also a lot of misinformation that’s out there, which is unfortunate about this industry. So do your research. If you have questions, we’re an open book. We’d love to answer them. We’d love to talk about what real costs are and the direction for where this is going, and there’s some really great people out there doing this work, but be careful about the information you have. Do your homework and reach out. We’d love to partner.

Dave:
That is a great segue to my last question. Zachary, if anyone in our audience wants to connect with you, what’s the best place to do that?

Zachary:
Hit us up on our website, alquist3d.com. We’re pretty responsive and follow us on all of our social channels. We’re pretty big on TikTok. If you look at The Layer Lord, that’s Aiman Hussein, he’s our 3D printer operator. I think we’ve hit a million followers at this point and something crazy millions and millions of views. The Time Magazine just did a story about it, which is nuts, but it’s very satisfying to watch it. He has fantastic musical selections that you can listen to while you watch the printer print. It’s a lot of fun, but follow us on there. We’re constantly updating that as well.

Dave:
Great. Zachary, thank you so much for joining us On The Market. If you want to hear more about Zachary’s story and more about the 3D printing industry in general, make sure to check out the episode that comes out tomorrow on the real estate show with myself and David Greene. Zachary, thanks again. We’d love to have you back in the future to learn more about what you and Alquist 3D are up to.

Zachary:
I’d love to. Thank you, guys. This was a pleasure.

James:
Thanks, Zach.

Dave:
I don’t even know what to say right now. That was so interesting, and my brain is just turning about all the incredible opportunity that is going to come in this industry over the next couple of years. Honestly, it’s incredible. What do you think about all this?

James:
I think I need to start calling land brokers across the US because-

Dave:
In dry places.

James:
Yeah, because I’ve always been really, I mean, doing production real estate, we’re doing a lot of different things in building, it’s always the headache of having too many bodies on your site, juggling people’s person … I mean, personalities are usually the worst part on the job site and the fact that this will eliminate 70% of them and build it cheaply or more affordably and you can get it done efficiently, I mean, that is the dream for all builders is to be able to cut costs and I had no idea that their costs had gone down so much because I thought they were about double for what I had heard.
So the fact that they are running almost in line with what we’re building at or a lot of local build, I mean, actually, they’re building around $300 a foot, and in California, it’s $400 or $500 a foot. So they are shredding certain costs already, which is pretty amazing.

Dave:
That’s unbelievable. Yeah. I think, like we talked about, this is just the tip of the iceberg. The technology, it sounds like it’s good enough to build homes, but it’s not reaching the point of efficiency. They’re getting to, what they say, 180 to 270 a foot to 300 on the high end, but that’s when they’re still learning. Once they start to figure this thing out and how to do this at scale, they could be printing all the time at 180 or 200 a square foot for really nice homes. Honestly, it just feels like this is going to be the future. I don’t know. Maybe I’m just drinking the Kool-Aid right now, but it really feels like this has the potential to totally change the way homes are built in the US or everywhere the world.

James:
Yeah, and what’s happening in the economy, too, it’s like labor has gotten so, I mean, that’s why we’re seeing all this inflation and everything, right? Labor is so expensive. Materials are hard to come by. So you’re literally fixing the two most major issues. I do think this is going to be the future. I mean, it’s like the internet when it was dial up at first. It was like, “What’s this internet thing?”
I remember when I was a kid, it was like we plugged in, it was slow, it was clunky, you would get some things done, and I do agree, they’re just in the beginning, and once they become really efficient, I think they’re going to reduce the cost by 35%, but then not only that, they’re going to be able to perfect the design and the implementation of it where it becomes a very high demand thing because if you look at 3D houses right now, they look like huts a little bit, but as that improves and the marketability of it improves, I don’t think anybody’s going to be swinging hammers much longer.
I mean, I did not really realize how quick it’s coming, but I mean, by 2035, there could be a lot less bodies out there swinging hammers and doing everything else if they’re really building them at this cost.

Dave:
It sounds like one of the biggest challenge is, honestly, going to be training the people to do this because I was talking to Zachary earlier before we even got on and he was saying that while it will reduce the amount of people who are on the job site, they actually think it’s going to create more jobs in designing new types of homes, designing the software that’s used on the printer. So like you said, it might pull people off the job site, but it actually might create a whole new industry.
I actually thought one of the things he said that was really interesting is that they’re trying to work with high schools, vocational schools, and colleges to train people to get to start using these things. We hear a lot, I don’t know, I’m sure you do too, a lot of people, young people who want to get into real estate who don’t necessarily have the capital to invest right now. That could be a really cool cutting edge way to get into the industry right now is learn how to use a 3D printer. Be on the cutting edge of something that’s going to potentially reshape the entire real estate industry. It’s probably a good paying job and you can use that to invest.

James:
Yeah, no. I wonder what that will do. I was just thinking about that. So like Boeing, they pay their people pretty well, right? They’re engineers. They run a production scale for planes because they run off that Toyota model where they’re building it as they’re moving it on a conveyor belt. So I envision that happening the same way, but then again, those, I mean, if you compare a framer’s wage versus those guys’ wage, I mean, that’s one-third of the cost. So I wonder what the average. I mean, it could actually produce a lot of high paying jobs in the US too because, I mean, to be a structural engineer or a machine mechanic, I mean, typically you’re making substantially more than someone building on site. I wonder what that’s going to do to the whole demographics of the building community though. Is it going to look completely … Is it going to be built by people in lab coats instead of people with tool belts?

Dave:
Yeah. That’s a really good question. I don’t know. That story you told about the printing nozzle is crazy. They just printed a new part. They were just like, “Oh, that thing broke. Let’s just go make a new part right here on site.” That just felt like Star Trek. I don’t even understand.

James:
Well, we’re just at one of our job sites the other day. All the scaffolding got stolen. So the sider showed up and it’s all gone. I literally was thinking about like, “Wouldn’t that be awesome if my project manager could just print a new scaffolding right there like, ‘Hold on, guys. Give me two hours. Let me get this back. Where did it go?’”

Dave:
That’s unbelievable. Yeah, and especially with all the material shortages right now. If you could have some flexibility about essentially sourcing your own products or finishes or whatever, right now, it’s just exteriors that they’re building, but it sounds like it could realistically in the next 10 years or so be anything. You could be printing sinks, you could be printing vanities, you could be printing anything.

James:
Yeah. A minimal modern concrete look is coming. That’s going to be the look on everything because you’ve seen those houses, right? They are just solid concrete, industrial windows. They have no siding. They’re very minimalist looking, and it’s the look they’re going for, but they’re also-

Dave:
Their wifi sucks.

James:
Oh, I bet it does.

Dave:
The wifi never works.

James:
We should have asked him that, “Are you guys building builtin wifi centers?”

Dave:
You better.

James:
I mean, it is crazy the amount. Also, the one thing we didn’t even really touch on too was the pollution that will … I mean, I wonder if it’s going to reduce the pollution output because if you don’t have to log as much, I mean, if things are getting poured out of concrete, I mean, there’s a substantial amount of environmental impacts that could be very beneficial also. So cleaning up the environment, reducing build costs, affordability factors, all these things can have some major, major impacts for the next 5000 years.

Dave:
It’s super cool. It feels like we’re on the edge of a really interesting new technology that I think we’re both going to be following pretty closely because I am pumped up about this right now. James, thank you as always for joining. It is always a pleasure, and I hope you enjoy your time on your boat right now. It looks lovely over there.

James:
I know. It’s my new office. I’m pretty excited. Now, I have a full goal to just become a podcast, professional podcast person so I can sit on my boat and work all day. I think this is the dream.

Dave:
I mean, you’re living it right now. All right. Well, thank you everyone for listening. We really appreciate it. We will be back with you next week with more On The Market.
On The Market market is created by me, Dave Meyer and Kalin Bennett, produced by Kalin Bennett, editing by Joel Esparza and Onyx Media, copywriting by Nate Weintraub, and a very special thanks to the entire BiggerPockets team. The content on the show On The Market are opinions. Only all listeners should independently verify data points, opinions, and investment strategies.